Why SSE may have more income appeal than Vodafone, AstraZeneca and Royal Mail

SSE PLC (LON:SSE) (SSE.L) shares may be a better income buy than shares in Vodafone Group plc (LON:VOD) (VOD.L), AstraZeneca plc (LON:AZN) (AZN.L) and Royal Mail PLC (LON:RMG) (RMG.L)


For over ten and a half years I haven’t sold a share, only recently breaking my rule with Bovis. SSE PLC (LON:SSE) (SSE.L) is one of my core long term shareholdings and this article will outline why.

How much interest do you get in your bank account these days? With me I’m lucky if I get one percent with Nationwide, and I spend some time on it. There are probably millions of people in the UK who get no interest at all.

At today’s level of 1501p, SSE shares provide a dividend yield of 5.96%. This compares favourably to other popular dividend shares such as Vodafone Group plc (LON:VOD) (VOD.L), AstraZeneca plc (LON:AZN) (AZN.L) and Royal Mail PLC (LON:RMG) RMG.L). For instance, Vodafone shares yield 5.6%, AstraZeneca yields 4.7% and Royal Mail has a yield of 5.3%.

SSE’s dividend is paid in 2 instalments a year, and most banks will probably only give you interest once a year, if you get anything at all. The next ex dividend date for SSE will be in late July, and will be paid around two months later. It is the Final or largest dividend it will pay out this financial year.

SSE has a strong dividend track record in my view.  Some have described its treatment of the dividend as sacrosanct. It has risen for the past 17 years, a record few companies can match. At the end of the day, everyone needs gas and electricity and SSE is the second biggest provider to consumers in the UK.

So what should one do about the share now?

When compared to a low interest rate in the bank, SSE seems to make sense as an income share. At a price of 1470p, I feel an investor would be getting a bargain buy. Sure, share price growth may be in relatively short supply, but the downside risk appears to be low in my opinion. SSE’s PE or price to earnings ratio seems relatively low, trading at just 12.39 times.

Looking ahead, its power generating business looks set to continue to provide good income for the share for years to come.